Subscribe to the Journal, call 505-823-4400

          Front Page

Serna to Retire as Insurance Chief

By Mike Gallagher And Colleen Heild
Journal Investigative Reporters
    SANTA FE— Eric Serna's controversial run as New Mexico's chief insurance regulator is over.
    Under terms of a settlement approved Thursday by the Public Regulation Commission, the embattled Serna will officially retire from his $91,495-a-year job on June 14.
    He will be on vacation until then, but has no authority, and will be allowed to keep his title so he can attend a national insurance conference.
    The deal cut short an internal inquiry focused on whether Serna should be removed for cause. His departure won't stop an attorney general's inquiry into a contract his agency awarded to a Santa Fe bank that contributed $129,000 to a nonprofit group Serna headed.
    Serna, a prominent Democrat politician and ally of Gov. Bill Richardson, has weathered more than his share of controversies during his 29 years in public life.
    They have ranged from allegations that he favored insurance companies that made contributions to complaints that he pushed the sale of jewelry from his family store to his employees.
    Serna, who served 18 years as an elected member of the old state Corporation Commission and unsuccessfully ran for Congress, was not present when the settlement was announced. The Corporation Commission was a predecessor to the PRC.
    "The continued entanglements with his private interests and his official duties tells us it was time for him to move on," said PRC vice chair Jason Marks.
    Marks echoed other commissioners in saying that Serna, 57, has made positive contributions to the state.
    "This is a good end for his career," Marks said. "He's done this with dignity."
    Serna, in a prepared statement, said he will spend his free time with family "while considering different opportunities in the private sector.
    "Events, unfortunate timing and political agendas that have come to light over the last several weeks have placed the State of New Mexico Insurance Department in an unfortunate light," Serna's statement said.
    "The trickle of baseless allegations has had a ripple effect of crippling the ability of our office to effectively and efficiently serve the people of our great state. I am hopeful that my retirement will clear a logjam of activity created by political agendas."
Baca's objections
    The agreement was hammered out between PRC members and Serna over the last week, with only commissioner E. Shirley Baca objecting to the terms.
    Baca said that Serna should be able to "retire in good standing," but that attaching conditions "gives the appearance of us being held hostage."
    Baca said she disagreed with the requirement that the PRC immediately cease its internal investigation. Baca said she didn't know what the PRC's outside attorney found over the past few weeks.
    Baca said she understood the attorney was looking into issues that included Serna's intervention with insurance staff that led to his daughter receiving a $25,000 insurance settlement from a car accident.
    "What's happened is a particular employee has been awarded a privilege and an opportunity to retire without finalizing the accountability that we, as commissioners, have responsibility for," Baca said in an interview.
    Marks said the internal inquiry headed by attorney Randy Felker was in its "early stages" and a report hadn't been issued.
    Marks said Serna's retirement saved the state money in legal fees and other costs.
    As part of the arrangement, Serna agreed not to sue the commission or the state.
    He also asked to keep his title so he can attend and deliver a report to a National Association of Insurance Commissioners' conference in Washington, D.C., from June 10-13. Serna serves as secretary/treasurer of the national group.
    Serna won't be allowed to charge the state for the trip or any of his expenses.
    He is prohibited from taking any official actions on behalf of the PRC or as superintendent of insurance, and cannot contact PRC employees except for commissioners, the chief of staff and the head of human resources.
    Serna won't have access to his office and must remove his personal belongings in the presence of representatives from the PRC and the AG's office.
Madrid weighs in
    Serna has been on paid administrative leave since April 6 at the request of Attorney General Patricia Madrid.
    "I believe the agreement reached by the PRC and Mr. Serna, which will allow him to retire and have no further contact with the Insurance Division, is an appropriate action by the PRC," Madrid said in a statement.
    She said she could not provide a timeline for her agency's inquiry into "the actions of Mr. Serna while Superintendent of Insurance in regard to Century Bank."
    The PRC first focused on the contract with Century Bank of Santa Fe after the Albuquerque Journal reported the bank had contributed $129,000 to the Con Alma Health Foundation.
    Under the contract, the bank acts as the insurance division's depository and now holds nearly $400 million in assets that are required to be posted by insurance companies.
    Serna has said he has done nothing wrong and would be vindicated in the inquiry.
    Gov. Bill Richardson issued a statement saying, "Eric Serna has devoted 29 years of his life to public service. During his career, he has served the people of New Mexico ably, promoted economic development and helped the underprivileged. I support his decision to retire and put the interests of the people of New Mexico first."
    Richardson friend, political contributor and fundraiser Jerry Peters is the majority owner of Century Bank, which won the insurance division contract in 2001 over three other banks that submitted proposals.
    Century Bank collects about $800,000 in annual fees under a contract signed by Serna and then-state Treasurer Robert Vigil in 2003.
Fees violated cap
    After inquiries by the Journal in March, the PRC discovered that the contract allowed the bank to charge an estimated $200,000 more annually.
    The PRC rescinded the increase because it violated a cap on fees set by the state Insurance Code.
    Serna and his staff have said they were unaware of the cap. Bank officials said they had no idea the increase was unlawful and have agreed to refund the money.
    Bank officials and Serna said the contributions from Century Bank to Con Alma from late 2002 to 2005 had nothing to do with the insurance division contract.
    Serna helped create the health foundation after his appointment as insurance superintendent in 2001, but resigned as president of the board of directors in April after some PRC commissioners said he had a conflict of interest.
    The foundation gives grants to mostly small, rural health organizations in New Mexico.
History of controversy
    Eric Serna has been a frequent lightning rod for controversy in his 29 years in government.
    For example:
  • In 1979, Serna was secretary of the State Employment Services Department when he and Gov. Bruce King were accused of packing the agency with political allies.
  • In 1981, Serna was a newly appointed Corporation Commissioner feuding with fellow Democratic Commissioner John Elliot when Serna was found driving a state car with an undercover police license plate. He returned the plate after news accounts raised questions about the practice.
  • In 1982, Serna ran for the Corporation Commission and faced criticism for taking campaign contributions from businesses regulated by the commission. Commissioners were prohibited from soliciting contributions from regulated companies but not from taking contributions. Questions about fundraising from companies he regulated dogged Serna throughout his career.
  • In 1985, Serna and his family purchased a jewelry store in Española. Rumors and news accounts followed over the years of Serna trying to sell jewelry to commission employees and to people having business with the commission. Serna consistently denied any wrongdoing.
  • In 1997, Serna lost his bid for the congressional seat vacated by Bill Richardson to a Republican in a district where Democrats held a 2-to-1 registration advantage. Green party candidate Carol A. Miller took 17 percent of the vote in the race which Serna lost by about three percent of the vote.
  • In 2002, Insurance Superintendent Serna founded Con Alma Health Care Foundation and appointed himself head of the board of directors. Serna called Con Alma "my crowning achievement." It played a role in events leading to his retirement when questions were raised about contributions to the foundation from an insurance company Serna regulated, and from a bank that won a lucrative contract from Serna's department.
        Serna described events leading up to his retirement as a "trickle of baseless allegations."